Palm Oil Industry Going High Tech to Boost Output

Updated on
  • Lack of labor means $1.2 billion in oil may be lost this year
  • Growers try new cutters, drones to cope with labor shortages

Pound for pound, palm oil has a huge edge over alternatives squeezed out of canola, soybeans or sunflowers.

It’s more versatile -- found in everything from chocolates to cosmetics -- and far more productive. The fleshy fruit yields five times more oil per acre than canola and has eight times the yield of soybeans.

The problem for growers such as Felda Global Ventures Holdings Bhd. is that the tropical tree fruit that yields the oil is harvested mostly by hand and in dangerous conditions that lead to a lot of waste. In Malaysia, the world’s second-largest producer, about $1.2 billion of oil may be left in the field this year. That’s why the industry is working on new technologies like electric cutting machines and pesticide-delivering drones to boost output.

A Kingoya employee prepares an ECUT cutter.

Photo: Sanjit Das/Bloomberg

“The industry is desperate to look for the right device to improve labor efficiency,” Palaniappan Swaminathan, chief operating officer at Felda Global’s plantation unit, said in a June 1 interview. “The main thing now is getting the right harvesting tool.”

Unlike soybeans or rapeseed -- waist-high row crops grown on flat fields suitable for tractors and giant harvesting machines -- cultivation of palms is tricky on the sometimes hilly plantations in tropical Malaysia and Indonesia, which combined supply about 86 percent of the world’s palm oil. Over the years, the industry has drawn criticism from environmental and labor activists as well as food companies after vast tracts of rainforest was burned to make way for plantations.

Dirty, Dangerous

While global production more than doubled over the past 15 years to a record as demand surged, farming methods remain dangerous and inefficient. At least one worker is required to service every 10 hectares (25 acres) of palm trees, often wielding sharp sickles on poles to slice high fruit bunches by hand and transport them by wheelbarrow. In contrast, a U.S. soy farmer can work a few hundred hectares using modern equipment.

Palm fruit is loaded onto a truck.

Photo: Sanjit Das/Bloomberg

The scaly-trunked oil palms produce dense bunches of fruit wedged between thorny fronds as much as 60 feet (18 meters) off the ground. The bunches contain 1,000 to 3,000 fruitlets that turn orange-red when ripe. They usually weigh 10 to 25 kilograms (22 to 55 pounds).

Read more: We consume 17 pounds of palm oil each year

Harvesting is dirty, difficult and dangerous -- from laceration wounds to the risk of stings or bites from scorpions and snakes that are common in plantations.

There are some mechanized cutters, but they only work for younger trees less than 16 feet tall and they can’t be used in all types of terrain.

Search for Winner

“Nobody has come up with a machine that a worker can work without having problems with the weight, the vibration and all that,” Felda’s Palaniappan said. “If anyone can come up with that machine for tall palms, that’s going to be the winner. We’re really all out looking for such a device, in house as well as working with other parties.”

Felda, the largest producer of crude palm oil, said it’s tripled spending on mechanization in the past five years, with plans for 10 million ringgit ($2 million) this year.

A Kingoya ECUT cutter.

Photo: Sanjit Das/Bloomberg

Another company working on the problem is Kingoya Technologies Sdn. It’s testing a battery-operated, electrical cutter developed by Izmir Yamin, who says the device can double productivity. A worker with his own knife can cut about 200 fruit bunches every four hours. Strapping a Kingoya ECUT cutter on his back would allow him to collect 400 to 500, according to the company.

“It actually reduces the stress of workers trying to pull down bunches manually," says Izmir, who is chief technology officer at Malaysian-based Kingoya. It’s also more reliable and less polluting than petrol-power cutters, he says.

Weight Problem

Among the drawbacks is the cutter’s weight of as much as 12.5 kilograms, which is 20 percent heavier than petrol-powered cutters. It also doesn’t work on taller trees, and at as much as 7,000 ringgit a unit, it also costs about 40 percent more than petrol models.

“We want to cater for tall trees using electrical cutters,” Izmir said at Kingoya’s factory in Selangor. “To do that, we need to make sure the ECUT will be reliable starting with the shorter palms first.”

The cutter will be tested by companies including Felda Technoplant, a subsidiary of Malaysia’s Federal Land Development Authority, and Sime Darby Bhd., according to Gopi Nair, director at Kingoya. Commercial production will begin by the end of the year.

A better cutter would mean more palm oil. In Malaysia, the industry estimates that 10 percent of fruit bunches are left to rot each season because of labor shortages. This year, the country is expected to produce 20 million metric tons of oil, so the lost revenue from rot would amount to about $1.2 billion, based on current prices. In Indonesia, crop losses are curbed by better labor availability. 

Drone Alert

In another part of Selangor, a drone takes off from a plantation carrying 20 liters of pesticide. Its target is a small plot of palm trees infested with bagworms, a pest that attacks the leafy green fronds and can cripple photosynthesis and harm the ability to produce healthy fruit.

A drone flies over a Universiti Putra Malaysia palm plantation in Serdang, Malaysia.

Photo: Sanjit Das/Bloomberg

Current methods to treat bagworm infestations involve piloted aircraft that carry out blanket, untargeted spraying of pesticide. It costs about 40 ringgit a hectare and can only be used if the area is at least 800 hectares. Malaysian-based Braintree Technologies Sdn has developed drones equipped with cameras that can detect infected trees, enabling more targeted treatment.

Drones also speed up the process of everything from tree-counting to forecasting yields, according to Arif Makhdzir, managing director of Braintree. They can help increase yields by around 20 percent, saving as much as 50 percent of the cost, he said in an interview.

“The industry is heading towards industrialization using smart robotics,” Arif said. “We in the oil-palm industry need to keep up with this technology.”

Read More: There’s About a 50 Percent Chance What You Buy in the Supermarket Has Palm Oil in It

— With assistance by Megan Durisin

(Updates to add labor comparison in sixth paragraph.)
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